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Despite the virtues of the global economy, production has now outstripped planetary boundaries and the environment is now contending with mass-scale pollution. The Pacific trash vortex, a gyre of plastic debris the size of Texas in the central North Pacific Ocean, suggests that things aren’t too symbiotic between humans and nature
Meanwhile, decades of effort focused on sustainability and corporate responsibility initiatives have struggled to make a difference. “Companies can’t be sustainable in an unsustainable society,” argues a recommended blog post on GreenBiz: A gold standard for truly sustainable enterprises.
One area that could have a significant impact on our sustainability is how we think about “goods” and what constitutes a modern supply chain. Today’s supply chains are linear: they consume materials, move products from manufacturing, distribution and selling, and then most often products are discarded after a while and land in the trash.
There’s growing consensus that the only way forward with sustainable production and growth is to switch from our current industrial “linear” model to a circular economy, which is: “For a product, the onus is on the manufacturer who needs to take care of the resources used in its products, so it keeps the metals, plastics, etc. in use within the product cycle for as long as possible and thinks about design for longevity, repair and re-use,” says CEO of Wrap, Liz Goodwin in a Guardian article.
McKinsey, Ellen MacArthur Foundation, and other large companies like Accenture and Philips support the circular economy. Companies on the forefront of this wave can create new product-to-service approaches, new materials recovery methods, and smarter projections and preparedness for future costs, such as waste disposal or raw materials prices. While it may take years or decades before the ultimate vision of the circular economy to take hold. the transition has begun..
The Sharing Economy
The sharing economy is made up of hundreds of compelling new businesses, including Uber, AirBnB, Lyft, and Kickstarter, which are transforming how goods and services are concepted, created, procured, and sold – in fact, changing the whole distribution model.
The trio of Internet ubiquity, cloud computing, and mobile broadband makes the sharing economy possible. Similarly, content subscription services like Netflix and Spotify are displacing many physical goods with on-demand digitized alternatives. And software-as-a-service (SaaS) models allow companies to forgo owning IT infrastructure, ultimately reducing the footprint of their hardware and electricity use.
In recent years, major manufacturing companies like Rolls Royce and Caterpillar have started the transition from manufacturing to managed services, taking care of product life cycles end-to-end. Today, you don’t buy a Rolls Royce jet engine: you lease it and the British manufacturer will manage the process end to end, installing, servicing, monitoring in the air, replacing and recycling parts, and ultimately delivering a service, not just a product. Again, we see these trends having a net positive impact on the environment.
The Circular Supply Chain
While this trend is a good start, it’s putting great demands on the modern supply chain.
Leaders have to rethink their supply chain economy as a network, not as a collection of single companies. The interdependence between companies is going to be suddenly much higher, which means they have to better choreograph the movement between materials and goods.
Below are considerations for anyone interested in creating a circular supply chain:
Pioneers all over the world are showing that not only is the idea of a circular economy sustainable, it’s great business. Given the changing consumer, business, and government attitudes toward consumption and the environment, the circular economy looks poised to make businesses operate smarter and more collaboratively – while discovering new sources of profit and a competitive advantage by re-designing supply chains.
This content is provided by an external author without editing by Finextra. It expresses the views and opinions of the author.
Galong Yao CGO at Bamboodt
08 July
Alex Kreger Founder and CEO at UXDA Financial UX Design
07 July
Anjna McGettrick Global Head of Strategy Implementations at Onnec
Nkahiseng Ralepeli VP of Product: Digital Assets at Absa Bank, CIB.
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